WHITE PAPER RISING SELF-PAY: CAUSES & EFFECTS How increased patient responsibility and decreasing reimbursements impact your revenue cycle. INTRODUCTION Along with all the merits of healthcare reform come certain consequences. Namely those that impact revenue cycle management. Declines in reimbursement, new payer models, pay for performance, ICD.10—these are among the factors that lead to a specific and undeniable conclusion. Self-pay isn’t just here to stay. It will continue to rise. If you look deeply into the exchanges, higher out-of-pocket models and various employer strategies that aim to curtail the cost of healthcare, such as high-deductible plans, it becomes clear that patient responsibility has nowhere to go but up. While providing quality care is, and should be, the first priority of any reputable healthcare provider, generating revenue is also paramount. Whether for-profit or not, providers need adequate financial resources to sustain their ability to make worldclass talent, cutting edge technology and facilities available to people who need care. NOT ONLY ARE MORE PATIENTS PAYING OUT OF POCKET, THE AMOUNT OF MONEY FOR WHICH THEY ARE RESPONSIBLE IS ALSO GREATER THAN EVER In 1999, only 5% of reimbursement came from patients. In 2014, we hit 40%. In 2015, experts predict that as much as 50% of reimbursements will come from patients. Not only are more patients paying out of pocket, the amount of money for which they are responsible is also greater than ever. This white paper highlights the factors that will have a significant effect on self-pay this year, and outlines a strategy that is proving to be an essential component of a comprehensive revenue cycle strategy. CAPIO PARTNERS - GET YOUR REVENUE CYCLE BACK IN GEAR 2 RISING SELF-PAY: CAUSES & EFFECTS A WHOLE NEW WORLD T he financial landscape within which providers have become so accustomed to working is shifting dramatically. Healthcare exchanges, new payment models, a major coding transition, declining reimbursement for several medical procedures, and a major redistribution of responsiblity in the payer mix are among the key causes of this shift. The result is that your number three payer after Medicare and Medicaid is now the patient. If you are a non-profit, couple that with the impending 501r and it’s just a “perfect storm”. Healthcare providers will need to adjust their processes accordingly to ensure they can reap the financial rewards of this new healthcare system. The future is going to magnify the patient financial responsibility. Here’s what providers can expect as a result. coverage because members are not paying their premiums. And, guess what? Payers are not consistent with when they deny the service back to the provider. Some are denying the service when the premium is first missed, while others are denying after the 30-day notice to the member has been issued and the premium is still unpaid. Which leads to an increase in self-pay. HEALTHCARE REFORM: With healthcare reform, many patients and members will opt for high-deductible health plans (HDHPs) to keep their premiums low. It’s also likely that more currently insured patients will move to HDHPs as their employers change plans in an effort to control costs. Health providers will need to adjust their current collections processes to address this shift in payer mix. More insured patients will result in more claims, and more claims mean more denials and/or liability to the patient. Health systems need to address this increased volume with internal and external strategies. The increase in patients with HDHPs will place an emphasis on upfront eligibility, estimator, and collections solutions. Health systems need to know what each patient’s responsibility will be and make every effort to collect this payment (or make payment plan arrangements) prior to the service being rendered or at the point of delivery. NUMBER THREE PAYER AFTER MEDICARE AND MEDICAID: THE PATIENT EXCHANGES: More and more programs are converting from federal to state not realizing that the federal programs have a significant out of pocket patient responsibility. The most prevalent federal program is the “Silver”, which holds the patient responsible for 40% of the total due to the provider. DENIALS: The other major challenge happening today is payers denying CAPIO PARTNERS - GET YOUR REVENUE CYCLE BACK IN GEAR ICD-10: It’s hot topic with a mixed bag of reactions. Some are taking it seriously, while others have adopted more of a wait-and-see attitude. Will providers, payers, and vendors be ready? Even if they are, can they support the operational impact of this major change? It’s reported that coder productivity will decline by at least 50%. So, will providers be prepared to potentially double their staff? Can providers handle the volume? How will they behave? Will some begin to engage the patient? It’s inevitable that some will. So what will happen with self-pay? While much of the focus for ICD10 support focused on investing in sufficient training and coding resources leading up to the October 2015 deadline, at least one ICD-10 authority warned providers not to overlook the need for posttransition support. “The service most people aren’t talking about is that of post ICD10 remediation services,” says Jim Morrison, senior VP of Operations at McKesson. “The pain associated with an ICD-10 transition won’t end in October 2015. Support will be needed long after the deadline to ensure a smooth transition.” 3 RISING SELF-PAY: CAUSES & EFFECTS A WHOLE NEW WORLD (CONT’D) PATIENT EDUCATION: Another big part in addressing the rise in patient self-pay will be patient education. A healthcare provider can’t assume that a patient understands his or her coverage. Providers need to ensure the patient knows his or her financial responsibility at the point of service to avoid surprises and unfavorable patient satisfaction scores. Educating patients about their financial responsibilities will be a key step in successful revenue cycle management processes going forward. Healthcare has turned into consumerism and the key to all of this is education and treating the patient appropriately. The pressures of the numerous changes can create inappropriate engagement of the patient. which may feel like the right thing to do at the time, but can have significant, adverse downstream effects. And then, externally, do you have safety nets? Coders in the wings? Partnerships to protect your interests? SELLING BAD DEBT: Some providers may shun the idea at first, but if you have done your due diligence internally, then used a third party for collection efforts, and have made an extensive effort to collect on unpaid debt, you might still have unpaid balances that could be paid by patients who can but choose not to. Traditionally, providers have just “shelved” the agency returns in this situation versus at least trying to reap some income from the inventory, which can be done without compromising the patient relationship or the reputation of the provider. At Capio, healthy relationships with you and your patients are critical to our success. It is no longer necessary to leave revenue on the table. Transfer your agency returns to Capio Partners and put more money on your bottom line. We invite you to include Capio Partners as a partner in keeping your collections efforts complaintless and your revenue cycle running smoothly. If you’d like to discuss how we might work together, contact: LYMAN SORNBERGER CHIEF HEALTHCARE STRATEGY OFFICER CAPIO PARTNERS 216-337-4472 [email protected] Learn more about Capio’s patient-centered approach on our online video page at: j.mp/capvids CAPIO PARTNERS - GET YOUR REVENUE CYCLE BACK IN GEAR 4
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